introduction jan 10th, chapter 1

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Baily, Procurement Principles and Management, 10th Edition, © Baily, Farmer, Crocker, Jessop and Jones 2008

SourcingCTPT 201-751

Pierre Chicoine

January 10th, 2011

Chapters 1

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Introduction

• Pierre Chicoine, I will be your course Lecturer for this semester

• Over 30 Years in the Logistics & Supply Chain Management Industry

• Also President of Magistics Solutions, specialized in Private Logistics Management Consulting and Supply Chain Security Consulting

• Have worked for companies specialized in transportation, distribution and warehousing, both private and third party

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Introductions

• The students update

• General knowledge level and practical experience

• Student goals with this course

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Discuss Course Outline

• Layout of Course

• Case studies during class

• 2 Assignments for 60% (25% - 35%)

• Final Exam 40%

• Class ends April 8, 2011

• Final Exam period April 11 to April 21

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What we are going to learn

• Role and processes surrounding sourcing, procurement, purchasing in the organization

• Practical applications– How it works in the framework of business– Focus on Logistics & Supply Chain

management

• Importance in today’s business context

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How we are going to Learn

• We will use the text book as our reference manual “Procurement Principles & Management”

• Open discussions on practical applications in our world

• Use case studies in class to discuss various topics related to this activity

• Use examples from multiple industry segments and develop holistic understanding as well as a micro understanding of the function itself

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Expectations

This classes success will be predicated on afew critical factors:1. Participation2. Personal involvement, draw on each others

personal experience and knowledge3. Genuine interest4. Respect for assignment deadlines5. Read Chapters & case studies before class6. Please turn off all communications devises

during class

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Preparation

• Need to assemble into groups of 4 students by next week

• Arrange to be seated together and close by

• Work together on class room case studies and assignments

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Assignments

• In groups

• Think outside the box, involves research beyond the scope of the textbook,

• University level presentation, all references will need to be documented

• Each sign an individual statement indicating what role/part/process you have prepared/played in the presentation

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Textbook

• Will make no references to the British system

• For understanding purposes, you can substitute £ for $

• Make no reference to government procurement

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Any Questions?

• Winter Rules– Delays before leaving class wait until 6:25

PM before leaving– Send email if you are not going to be at

class

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Objectives of this chapter (1)

• To discuss the scope of purchasing• To identify the purchasing cycle concept• To discuss purchasing and supply as a service activity• To discuss the changing role of purchasing and supply• To explain how purchasing might develop from an independent

function to an integrated activity• To identify the internal and external influences which have affected

the evolution of purchasing• To examine the ‘total acquisition cost’ concept• To consider the adoption of relationships based on mutual benefits

as an alternative to the traditional transactional, adversarial approach

• To highlight the evolution of concepts relating to purchasing development

• To identify key practices encountered in developed strategic purchasing

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• To supply the organisation with a flow of materials and services to meet its needs.

• To ensure continuity of supply by maintaining effective relationships with existing sources and by developing other sources of supply either as alternatives or to meet emerging or planned needs.

• To buy efficiently and wisely, obtaining by ethical means the best value for every pound spent.

• To maintain sound co-operative relationships with other departments, providing information and advice as necessary to ensure the effective operation of the organisation as a whole.

• To develop staff, policies, procedures and organisation to ensure the achievement of these objectives.

The scope of purchasing

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• To select the best suppliers in the market.

• To help generate the effective development of new products.

• To protect the company’s cost structure.

• To maintain the correct quality/value balance.

• To monitor supply market trends.

• To negotiate effectively in order to work with suppliers who will seek mutual benefit through economically superior performance.

• To adopt environmentally responsible supply management.

More specific objectives

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Purchasing

• Where does it fit?

• Students – Name other departments in the modern

organisation

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Table 1.1 Some reasons for the increased importance and recognition of purchasing

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Figure 1.1 The increasing importance of purchasing and supply in themanufacturing sector

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Table 1.2 Changing purchasing roles: reactive and proactive buying

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Figure 1.2 The ‘transactional’ relationship

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Figure 1.3 The ‘mutual’ relationship

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Figure 1.4 The ‘Procurement Positioning’ tool

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Figure 1.5 The price/cost iceberg

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Figure 1.7 A four-stage purchasing development model

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Figure 1.7 A four-stage purchasing development model (Continued)

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Figure 1.8 The three principal areas of focus

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Figure 1.9 The purchasing development matrixSource: Jones, 1997

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The following list includes many of the ideas taught to students of purchasing at all levels. Clearly, this good practice will not be practicable in an organisation with a less than fully developed purchasing function.

Identify and work with key suppliersDevelop openness and transparencyAlign systems with strategic initiativesArticulate mutual goalsForge partnerships where appropriateUse complementary competenciesEmploy dedicated complementary assetsEmploy appropriate technologyUse appropriate e-technology/systemsShare competencies and resources

Best practice in strategic supply management

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Establish common languageEmphasise mutual benefitsImplement KaizenRemove decoupling pointsEmpower individualsEmpower suppliersFocus on customer needsPursue and eliminate wasteConsider core/non-core questionsBuild knowledge baseUse knowledge baseBe responsive, and ready to change

Best practice in strategic supply management (Continued)

introduction jan 10th, chapter 1

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